Agenda item

(Director of Housing) To consider the attached report.

The Panel received a report from the Director of Housing regarding the proposed Council Housebuilding Programme.

The Cabinet had agreed in principle that the Council undertake a modest Council Housebuilding Programme, and had asked this Panel to consider the detailed issues of implementing the programme and make recommendations to the Cabinet.

The last Council property was built in June 1985. Since 1977, the Council had sold around 6,160 properties, predominantly through the Right to Buy. Currently, the Council owned and managed around 6,500 properties. Since the 1980s, councils had been discouraged by successive governments from building new social housing themselves, and encouraged to act as “enablers,” by facilitating housing associations to build new social housing. However, the polices of the previous and current Governments had changed and, mainly as a result of the collapse of the property marker in 2008, local authorities had more recently been encouraged to build once again. In August 2009, the previous Government introduced new regulations which removed major financial disincentives.

The Council had a number of difficult-to-let garage sites and other sites that could be developed to provide an estimated 120 homes over a 6 year period. The proposed approach was to appoint an existing housing association, through a competitive tender process, acting as a Development Agent, and providing all the required development and project management services, rather than the Council employing its own professional team of staff. Development appraisals for each of the identified sites would assess whether or not they had development potential, the costs and anticipated income.

It was proposed that rents charged for the new developments would be at the new “Affordable Rent” levels up to 80% of market rent levels.

Grant funding from the Homes and Communities Agency (HCA) may be available in the future, but it was suggested that any shortfalls in capital funding for developments should be met through the sale of some development sites on the open market, without any financial support from the General Fund.

It was proposed that the Cabinet would adopt a Development Strategy and approve the budgetary requirement for the Housing Capital Programme. It was currently estimated that capital funding of around £2.5 million per annum would be required for the construction of 20 properties each year, and that a programme of 120 properties over 6 years would cost around 16 million.

The Chairman explained that he would be unable to present the Scrutiny Panel’s report to the Cabinet on the 5 December 2011 himself, due to an important work commitment. However, after consulting the Vice Chairman of the Scrutiny Panel, he had asked Councillor D Stallan to present the report on the Panel’s behalf and asked for the Panel’s endorsement of this proposal which was given.

RECOMMENDED:

That the following recommendations are made to the Cabinet:

(1)        That a housing association be appointed to provide a Housebuilding Development Agency Service for the Council, including all development and project management services, and the provision of all professional building services including architectural, employer’s agency, quantity surveying, cost consulting, planning supervision, engineering and surveying, but excluding works construction;

(2)        That the Housing Portfolio Holder be authorised to appoint a Development Agent in respect of the following:

(a)        After a competitive tender process using the EU OJEU Restricted Procedure procurement process;

(b)        That has existing development partner status with the Homes and Communities Agency (HCA);

(c)        Based on the most economically advantageous tender (in terms of price and quality) received from at least 5 housing associations, shortlisted through a Pre-Qualification Questionnaire (PQQ) process, in accordance with pre-determined evaluation criteria;

(d)        After the Housing Portfolio Holder has previously approved the evaluation criteria to be used for both the PQQ Stage and Tender Stage, prior to the implementation of each stage, in accordance with procurement requirements;

(e)        On the recommendation of a Selection Panel comprising the Housing Portfolio Holder, Chairman of the Housing Scrutiny Panel, Director of Housing and Assistant Director of Housing (Property); and

(f)         For a four year period with options to extend the contract for three further individual years;

(3)        That the Essex Procurement Hub be asked to undertake the EU procurement process for the appointment of the Development Agent, on behalf of the Council;

(4)        That a suitably experienced housing development consultant be appointed to undertake the appointment process for the Development Agent, in liaison with the Essex Procurement Hub funded from within the existing resources of the HRA’s Feasibilities Budget;

(5)        That, through the contract with the Development Agent, all the Development Agent’s consultants be required to provide the Council with collateral warranties, as a safeguard to enable the Council to take legal action against a consultant direct if problems arise in the future due to negligence;

(6)        That the evaluation of PQQs and tenders be undertaken by officers and the housing development consultant, in accordance with the pre-determined and approved evaluation criteria;

(7)        That the Housing Portfolio Holder be authorised to agree any other aspects of the appointment process for the Development Agent, not covered by this report or recommendations/decisions;

(8)        That once the initial desktop development assessments of garage and other housing sites have been completed by officers and the HRA Financial Plan agreed, reports be submitted to the Cabinet on a proposed Council Housebuilding Development Programme, based on the completion of around 20 new affordable homes per annum, and seeking approval to undertake development appraisals and seek planning permission for specific sites;

(9)        That, once the Cabinet has approved the Housebuilding Programme, further reports be submitted to the Cabinet on the required budgetary provision for the Housing Capital Programme

(10)      That, in the meantime, appropriate capital provision for the Housebuilding Programme be included within the Indicative HRA Financial Plan to be considered by the Cabinet at its meeting on 5 December 2011;

(11)      That appropriate revenue provision be made within the Housing Revenue Account from 2012/13, to fund the associated revenue costs of the Housebuilding Programme, including a budget for abortive fees for developments that do not proceed;

(12)      That Affordable Rents (not Social Rents) be charged for the completed Council properties, in accordance with the Government’s Affordable Rents Framework with rent levels to be charged for individual properties as part of development appraisals;

(13)      That the Cabinet approves all financial and development approvals, any borrowing requirements and the required Housing capital Programme funding for proposed “development packages” by the Council on an individual basis;

(14)      That such development packages be funded from the following sources (with full details to be set out in the development appraisals for individual schemes approved by the Cabinet), on the basis that the Council House building Programme is self-funded, without any financial support from the General Fund:

(a)               Housing Revenue Account (HRA) surpluses;

(b)               HCA funding (where possible);

(c)               Borrowing (if necessary);

(d)               Cross-subsidy from the sale of other development sites within the Housebuilding Programme on the open market if necessary; and/or

(e)               Capital receipts from future Right to Buy sales, if the Government introduces its recently announced policy to increase discounts under the Right to Buy, and replace each property sold with a new affordable home.

(15)      That, once the Development Agent has been appointed, a Development Strategy be formulated setting out the proposed approach to planning and delivering the Housebuilding Programme, for adoption by the Cabinet;

(16)      That a new part-time Senior Housing Officer (Development) post 18 hours per week) be established once the Development Agent has been appointed, the post be job-evaluated; and appropriate budget position be made within the Housing revenue Account for 2012/13 once the salary grade has been determined;

(17)      That, once appointed, the selected Development Agent seeks development partner status for the Council from the HCA, and completes the Pre-Qualification Questionnaire on behalf of the Council; and

(18)      That the appointed Development Agent be required to procure contractors to construct the properties within the development packages on behalf of the Council, in accordance with the Council’s Contract standing Orders and EU procurement requirements (if necessary).